By: Sowmya Saranathan -- Research Analyst, Crops and Fibers
14 February, 2018
The sudden surge in the oil and gas market in 2011, resulting from the exploration of shale gas, spiked the guar gum market since it is an integral component of the fracking fluid that is used for enhancing the oil recovery. However, oil production fell significantly by 28.5 percent from 2013 to 2014 mostly due to the crash of the crude oil market. This led to a decline in gas and oil exploration and thereby impacted the import demand for guar gum from India. Weaker export demand and the stock burden were responsible for the debilitation of the guar gum market, leading to the closure of 70 percent of its processing units in India. However, after two years of down cycle in the shale gas industry, explorations were quite high in 2017, owing to the Energy and Oil Policy of the new U.S. government. Therefore, the industry is anticipated to recover in 2018 and consequently lead to the recapitulation of oil well drilling activities. By the time the market for guar gum revives to meet the demand from the oil sector, it is expected that xanthan gum, which is the best sustainable substitute, would replace guar gum transiently.
Hydrocolloids |
Type of application |
Target industries |
Percentage Consumption by End-use Industries |
Sustainability |
|
2012–2014 |
2014–16 |
2016–2018 (F) |
|||
Guar Gum |
Food grade |
Bakery; Dairy, Processed Foods like ketchups and jams, Beverages |
20 |
18 |
? |
Xanthan Gum |
42 |
45 |
? |
||
Guar Gum |
Fast-hydrated gums |
Oil and Gas Drilling, Mining, Explosives |
70 |
62 |
? |
Xanthan Gum |
39 |
44 |
? |
The increasing use of xanthan gum as a low-priced alternative to guar gum in a wide range of food applications coupled with the projected increase in shale gas explorations are likely to propel xanthan gum demand for oil exploration activities until guar gum can support the projected demand from oil sector. Moreover, an increase in the production capacity of xanthan gum by the U.S. players in the near future along with the ongoing demand from food sector and anticipated demand from oil drilling activities can compensate the guar gum market for a short span until guar gum becomes available in the market. This also indicates that the initiation of shale gas exploration activities in the U.S. could propel the demand for the xanthan gum over the forecasted period as it is an important component employed in drilling fluids, which can replace the bound availability of guar gum.
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